Fundamentally, the accounting profession involves recording, analysis, summary and reporting of financial transactions which provides vital information to various parties including firm shareholders, employees and investors, among others. As such, people with an accounting education or certified public accountants (CPA) can pursue a variety of career options. These, according to the American Institute of Certified Public Accountants (AICPA) (2016), include financial accounting and reporting as well as management accounting among others like auditing, financial analysis and tax accounting.
Basically, financial accounting entails tracking and recording financial transactions as well as summarizing and presenting them in financial reports or statements which include balance sheets and income statements, among others. These statements are vital for decision making by a variety of stakeholders ranging from shareholders and employees to competitors, suppliers, lenders and investors, among others. This career option allows provision of guidance based on compiled financial transaction statements to individual and firms regarding potential investment and performance of various financial instruments, among other functions. Given the importance of finance statements to the myriad parties identified, financial statements must adhere to various established rules and accounting standards referred to as Generally Accepted Accounting Principles (GAAP) (Diamond, & Khemani, 2006). These rules and associated standards and principles which ensure credibility of financial statements are developed by the Financial Accounting Standards Board (FASB) which means that CPAs in this field must abide by these rules.
Management accounting, unlike financial accounting, is broader as it not only involves provision of financial information but also non-financial information to managers necessary for effective decision making towards business success. This is accomplished through expertise in financial reporting and control as well as managerial collaboration towards effective planning, formulation and implementation of firm strategies and performance enhancement. This is in line with the various facets that make up this career option including risk, strategic and performance management given how financial aspects traverse these areas in organizations. The Bureau of Labor Statistics (2016) reports that ‘management accountants often start as cost accountants, junior internal auditors, or trainees for other accounting positions’. As a career option, it provides potential advancements into higher positions like chief cost accountant, accounting manager, budget director as well as manager of internal auditing or even treasurers, controllers and chief financial officers, among others.
Forensic Accountant Position
Job outlook for accountants and auditors as presented by the Bureau of Labor Statistics (2016) indicates projected growth of 11 percent between 2014 and 2024 with globalization, increasingly complex tax and regulatory environments and growing economies identified as influential factors. In line with stricter laws and regulations in the financial sector, the position of a forensic accountant seems poised for a meteoric rise in demand especially considering increased incidences in accounting fraud and other financial crimes. Davis, Ogilby and Farrell (2016) indicate that forensic accountants utilize their knowledge in accounting and combine it with investigative skills in investigative settings. As such, they engage in a variety of activities involving collection of evidence for uncovering fraud, testifying in court cases and even quantifying financial losses accompanying financial crimes.
Good report writing, interpersonal communication skills, ability to testify in the position of an expert witness as well as excellent verbal and written communication skills as quite necessary. Other elements include integrity, analytical skills, attention to details and independence as well as credibility, alongside knowledge in white-collar crime like money laundering and fraud, insurance claims, GAAP violations, among others (Davis et al. 2016). Potential employment opportunities are wide ranging including employment by consulting firms, public accounting firms, insurance companies, government departments and financial institutions as well as lawyers and law enforcement agencies (Davis et al., 2016). Forensic accountants are valuable to firms in relation to activities like uncovering financial misconduct, tracing funds and hidden assets, investigating people and solving financial disputes by identifying fraudulent financial transactions. Furthermore, it pre-empts negative outcomes tied to unhappy firm stakeholders as well as litigation and other disputes that may arise due to lack of firm compliance with set laws, limited understanding of business risks and inadequate analysis of regulatory changes among other factors.
- AICPA. (2010). CPA Career Paths; Common Career Paths. American Institute of CPAs. Retrieved from: http://www.aicpa.org/Career/CareerPaths/Pages/CareerPaths.aspx
- Davis, C., Ogilby, S., & Farrell, R. (2016). Forensic accounting: An AICPA-commissioned survey, characteristics and skills of the forensic accountant, gives insight into the top skills accounting and legal professionals look for in a forensic accountant. Journal of Accountancy, 210(2), 54.
- Diamond, J., & Khemani, P. (2006). Introducing financial management information systems in developing countries. OECD Journal on Budgeting, 5(3), 97-132.